NRB Increases the Paid-Up Capital Criteria for Companies Conducting Payments and Remittances Services; Here are the List of Major Highlights

The paid-up capital for companies that offer payment services has been increased by Nepal Rastra Bank. The National Bank issued the Permit Policy, 2079, which directs institutions participating in payment-related operations to raise their paid-up capital.

A new policy was published on Thursday and replaced the previous permission policy-2073 covering the creation and operation of institutions that deal with payments and remittances. Here are the major highlights:

• According to the new system, the paid-up capital of payment service providers operating other devices besides payment cards has been fixed at Rs. 5 Crores.

• The paid-up capital of payment service providers that operate payment cards and other devices has been set at Rs. 25 Crores.

• In the case of payment system operators, the capital has to be increased to Rs. 40 Crores. The payment system operator has to maintain a minimum paid-up capital of Rs. 80 Crores for the company that is established in Nepal but conducts payment transactions outside Nepal through payment instruments.

• The National Bank has made an arrangement to maintain the minimum paid-up capital specified by the end of Ashad 2085.

• Banks and financial institutions established abroad but engaged in payment-related operations in Nepal will not be subject to this regulation regarding the minimum paid-up capital.

• Foreign investment may also be attracted by service providers. Whereas with the approval of NRB, companies that have applied for or presently hold a license to conduct payment-related operations may accept investments from international firms, companies, or organizations. Such investment cannot total more than 15 percent of the licensed organization's paid-up capital.

• A company that has been granted a foreign investment permission is required to issue shares to the general public within three years of the date the investment was approved, or, in the event of a new company, the day the permit was granted.

• The new regulation prohibits the purchase and sale of promoter shares for five years following the day the license was obtained. The promoter shares, however, can be bought and sold with the central bank's consent in the event that more funds is required when two or more companies merge, when new investors are added, or for any other reason.

• The National Bank has also implied that anyone holding a constitutional position, a position of authority at the local, provincial, or federal level elected in accordance with the federal structure, or a position on the board of directors of an organization it has licensed or permitted is prohibited from holding any position within an organization that engages in payment-related activities.